Telematics is the name for the location-based tech that allows Lemonade Car to price policies fairly, based on how much and how safely you drive. We think it’s pretty cool, and we hope you’ll agree.
But what the hell is it, and how does it all work? How does the technology integrate with the Lemonade app? And how will all of this affect what you pay for car insurance?
We break down all of this in more detail below.
TL;DR: We want you to save money, and telematics helps us do that! Apply for Lemonade Car insurance to see for yourself. It’s easy—and dare we say fun? (Bonus points if you discover the lil’ Easter Eggs we’ve hidden on the landing page…)
What is telematics?
Telematics might sound like an ‘80s pop band, but it’s actually a word used to describe how insurance companies cull data from telecommunications (phone lines, cables, cellular networks) and what are called informatics (like computer systems).
They’re part of the Internet of Things that is—insert your best Morgan Freeman voiceover here—revolutionizing the insurance industry. FYI, if you drop the phrase ‘Internet of Things’ into casual conversation, you’re guaranteed to seem 5x smarter than usual.
Insurers use the telematics data to track driver behavior and driver safety, and often offer discounts based on good driving. Some insurers collect telematics info by having a special chip installed in your car’s windshield. Lemonade does it all through your phone, which already has nifty tools embedded in it, like a gyroscope and GPS. All you have to do is keep location services enabled.
How does this help with what I pay for insurance, as a driver?
The big takeaway here: Telematics helps reward you for safe driving, and avoid you being penalized based on how actuarial science might price your policy based on demographics.
In simple terms, let’s say you’re an 18-year-old guy in Tennessee. Traditionally, to an insurer, you might seem like a risky proposition due to your age and other factors. That’s not very fair if you’re actually a cautious driver, someone who comes to a complete stop at stop signs and never speeds. With telematics in play, your insurer is able to judge how you actually drive, not how people like you tend to drive.
What are the other benefits of using telematics?
We’re so glad you asked!
With Lemonade Car, our drivers enjoy a wide range of benefits, all thanks to telematics. When Lemonade Car policyholders enable location services for the Lemonade app, they enjoy benefits and savings now, later, and as they drive.
First things first: your premiums. With telematics, Lemonade Car is able to offer you lower premiums depending on how much and how well you drive. The better you drive, the less you pay, simple as that.
In addition, if you don’t drive much, Lemonade Car will tailor your coverage based on your mileage. This makes sense, since someone who puts 50,000 miles on their car every year is much more likely to get in a crash than someone who only drives 5,000 miles.
Also, if a policyholder needs some assistance after their car breaks down or gets into an accident, telematics helps to pinpoint exactly where to dispatch roadside assistance, which is free with Lemonade Car when you keep those permissions enabled.
And finally, Lemonade Car’s location-based technology tracks your mileage and plants trees based on how much you drive to help you shrink your carbon footprint from driving. Read more about this initiative here.
Do I need to have telematics turned on to use Lemonade Car?
Neglecting telematics is a bit like ordering a BLT and then asking to hold the bacon and tomato—you’d be losing what really makes Lemonade Car awesome.
Lemonade Car uses tech to give you the best real-time services including fair pricing, safe driving discounts, and roadside assistance. If you don’t have telematics turned on in the location settings of your phone, we won’t be able to provide you with the services and coverage that Lemonade Car was designed to offer.
You’ll pay more, you won’t be rewarded for safe driving habits, and we won’t be able to detect if you’ve been in a crash and might require emergency help.
What happens if I don’t want to use telematics?
If you don’t want to use telematics, then Lemonade Car might not be right for you. No hard feelings, we can still be friends!
Without location-based services enabled on your Lemonade app, we won’t be able to offer you these savings, roadside assistance, or plant trees based on how much you drive.
Lemonade Car was designed to give our drivers the best coverage and a seamless experience, all with telematics in mind. It’s the heart of the product, and something we’re pretty proud of.
What kind of data is telematics able to analyze?
We’ll be honest—we love hearing data scientists talk, but a lot of what they say goes over our heads. Essentially, telematics is interested in collecting info on how safely you’re driving. Based on your actual real-time driving record, a policyholder has a score, from 0 to 100, that reflects their driving.
If you’re driving down the street and you didn’t notice the stop sign because you were messing with your phone, you may have braked pretty hard to avoid running the stop sign. Or perhaps you’re speeding; with location services enabled, it’s simple enough for your phone to ‘know’ what the road’s limit is—the same thing happens when you use a navigation app like Waze. Ditto if you take a phone call or send a text message while on the road.
The sensitive gyroscopic mechanisms inside your phone also track and analyze simple movements, whether your phone is in your pocket, in a dashboard holder, or sitting on the seat next to you. That means your phone can fairly accurately sense if you’ve slammed on the brakes, or if you’re taking a turn erratically or at unsafe speeds.
Some other factors that might come into play include when you’re driving—in the morning, for instance, or at midnight—since that might affect your risk of getting into an accident.
Thanks to machine learning, telematics is able to take in all these data points and then make predictions based on this wealth of information.
Okay, so how does telematics know if I’m driving—or if I’m on the bus, or in a Lyft?
Good question! It comes back to the machine learning we just mentioned. Telematics is able to make predictions, based on various data, to determine if you’re the driver or if you’re just a passenger, as well as if you’re on public transportation (or just, you know, riding your e-bike really fast).
But let’s say that you call an Uber after a Friday night party and your driver is…not the safest. He’s speeding, careening around curves, and generally causing your heart rate to spike. You get home in one piece, but want to make sure that your telematics app didn’t mistakenly assume you were the one driving like a lunatic.
The motion sensors in your phone are able to pull enough information to determine, with high accuracy, whether or not you’re the one behind the wheel.
Worried about a particular trip? If you want to check the status of a trip, or if you have any other questions about which trips should be included, you can reach out to us at [email protected] and we’ll make sure that the right information is used.
Can I just turn on location services when I’m driving, and shut it off when I’m not?
Nope. In order to work properly, telematics needs to be running in the background all the time, not just when you’re behind the wheel.
What other sort of apps use similar location technology?
Telematics are mostly used to manage fleets of commercial vehicles—that’s an interesting story for another day—and for car insurance. With Lemonade Car, it helps us get smarter about your coverage every day as you drive. Over time, this helps us offer the lowest premiums and the most efficient services to our drivers.
Location-based technology is something that most of us enjoy and benefit from every day, in some way. It’s used in everything from Google and Apple Maps and Waze to the apps for Uber and Lyft, Dark Sky, and Pokémon Go.
Technology can be a friend or foe. Some of it—Instagram Kids, we’re looking at you—is pretty questionable. But we’re genuinely excited about how Lemonade Car and its location-enabled tech can help keep your insurance costs down.
If you’re thinking “yeah, yeah, every company says they only care about the customer,” keep in mind that our entire business model is based on not making money from denying claims.
While your previous experiences with insurance companies may have seemed adversarial—You Vs. The Man—that’s not how we roll. Sure, we want to make a profit and thrive as a company, but we also want to help your wallet—not to mention support amazing charities, through our Giveback program, and the environment, via Lemonade Car’s partnership with One Tree Planted.